Bremerton kicks in more cash in effort to boost conference center

The management of the Kitsap Conference Center is working to attract more business to the city-owned facility, including by working with local hotels to help bring out-of-town customers.(Photo: Meegan M. Reid / Kitsap Sun)Buy Photo

BREMERTON — Facing down stagnant revenues and increasing taxpayer subsidies, city leaders are asking some hard questions about the Kitsap Conference Center these days.

Some members of the Bremerton City Council are concerned debt incurred to expand the center in 2013 isn't being paid down fast enough. The city's audit committee commissioned a study of the center's financial performance to help officials decide what course to chart in the future. And Mayor Greg Wheeler says he's open to a competitive bidding process when the contract with the center's current vendor, Columbia Hospitality, ends in 2019.

Lori Main, though, welcomes the conversation. The conference center's general manager for Columbia Hospitality since August 2017 — a marketing professional with decades of experience managing hotels — has already rolled out a strategy she says has begun to grow revenue. It ties together more closely the conference center and the city it serves.

"We need to make Bremerton the destination," Main said. "The conference center really is the gateway to the city."

The conference center complex, opened in 2004, was a $47 million public-private development that reshaped the Bremerton waterfront. The county’s public facilities district kicked in $6.9 million toward construction, and the city took out $11.7 million in revenue bonds, which it has been paying back with revenue from parking in its underground garage.

Lori Main, General Manager of the Kitsap Conference Center, moves through a banquet hall that is being set up for a wedding on Friday, August 31, 2018.(Photo: Meegan M. Reid / Kitsap Sun)

Columbia is paid $7,500 a month to run the conference center, along with retaining 1.5 percent of its gross revenues. In 2017, that translated to $108,000.

The conference center's growth and fall mirrored economic trends before 2010. Revenue was highest in those early years, between 2006 and 2009, when it averaged about $1.4 million. But as the Bremerton economy has grown, the center's use hasn't grown with it, averaging about $1.2 million a year.

Increasing costs, namely in the form of minimum wage increases, have pushed up expenses, Main said. Since 2010, that has helped push the center's net income further in the red for each year, with 2017 the highest yet, at $186,000 in the hole.

Some of the blame for the conference center's declining revenues can be laid at increased competition. In 2015, the Suquamish Clearwater Casino opened a 10,000 square-foot conference center of its own, complete with expanded parking and nearly 100 hotel rooms. Bremerton, Main said, is short on hotel space, making it a challenge to book bigger events.

The city has slowly been increasing the center's subsidies. Revenue from the lodging tax, paid by visitors staying in Bremerton hotels, provides the biggest chunk. Until 2017, it provided $155,000 to the center, but city leaders pushed that up to $250,000 over the next five years.

In total, the city will spend $460,000 from various funds this year to keep it going, according to Bremerton Finance Director DeWayne Pitts.

The city’s audit committee, made up of both council members and community representatives, asked City Auditor Jenny Sims to analyze the conference center’s financials, compare those numbers with other government-owned convention centers and “provide other relevant information to assist” city leaders “in their decisions regarding the pending expiration of this contract.”

Sims' report found that, with one exception in Seattle, government-run conference centers around the state survive on subsidies from the lodging tax.

"You can’t expect these things to break even," said City Council President Eric Younger. "There’s gonna be some kind of subsidy. That’s what the LTAC (Lodging Tax Advisory Committee) money is for."

Sims had not finalized her report, however, when the city's $450,000 in allocations for its lodging tax revenues came under scrutiny this summer by the Bremerton City Council. Some council members, like Younger, were concerned the center wasn't getting enough additional money to help pay down the expansion debt.

Councilwoman Leslie Daugs, chairwoman of the audit committee, felt it was important the council had a copy of Sims' report, even if it was not finished, given how germane it was to the discussion currently at hand, she said.

The lodging tax advisory committee is made up of at least two representatives from businesses that collect the tax and two representatives of organizations that might receive the funds. A fifth member, Councilwoman Pat Sullivan, serves as its chair. Until last week, she thought she was a nonvoting member.

But, after she and the city's attorneys researched the lodging tax law, they found Sullivan is, in fact, a voting member, Sullivan confirmed this week.

To make matters worse financially, the conference center's expansion into the third floor of the Harborside complex saddled the city with more debt. It produced nowhere near the revenue growth city leaders at the time said it would. The city now pays rent to Kitsap Transit for the third-floor space and is still in the process of paying back a $500,000 loan from the city's vehicle replacement fund. In an effort to more quickly pay off the debt, city leaders asked the lodging tax advisory committee for $200,000, of which the committee dedicated $75,000.

That did not sit well with Younger and some members of the City Council, who are asking the advisory committee to take another look this next week at allocating more to pay down the center's debt.

In terms of the contract, Mayor Wheeler said it's not about Columbia. He just wants to get the best deal for taxpayers, he said.

“It’s not that I’m unhappy with Columbia,” he said. “It’s that I think it’s good to compete the contract.”

Main, meanwhile, pointed to positive signs. The center has already made its projected revenues for all of 2018 and September is only beginning, Main said. There were nearly a dozen weddings hosted in August alone.

Main's strategy is twofold. Inside Kitsap, she's pushing collaboration with local hotels and other attractions. Putting together a complete package for organizations coming here — rather than leaving it up to them to find hotel space — is a far easier sell.

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Lori Main, General Manager of the Kitsap Conference Center, talks about the different booking possibilities in the third-floor banquet room at the Kitsap Conference Center on Friday.(Photo: Meegan M. Reid / Kitsap Sun)

"You don't need to make it a scavenger hunt to come here," she says.

Outside of Kitsap, though, is where Columbia's conference center sales team is focused, she said. She believes it's a matter of showing out-of-towners Bremerton's assets. She says that companies and groups that come visit are far more likely to book once they take a look around.